PVH's Calvin Klein And Tommy Hilfiger Are First Fashion Victims Of U.S.-China Trade War

Core Viewpoint - PVH, the owner of Calvin Klein and Tommy Hilfiger, has been blacklisted by China's Ministry of Commerce for undermining market rules and violating Chinese laws, marking a significant escalation in the U.S.-China trade tensions [1][3][4] Group 1: Blacklisting and Implications - PVH is the first fashion brand to be added to China's "unreliable entities" list, a designation typically reserved for defense and biotech companies [3] - The blacklisting could effectively halt all PVH business operations in China, although no specific sanctions have been announced yet [2][3] - The decision follows an ongoing investigation into PVH's operations in China that began in September [3][6] Group 2: Business Impact - The Asia-Pacific region accounted for approximately 20% of PVH's $9.2 billion revenues in the most recent fiscal year 2023, highlighting the importance of the Chinese market for the company's retail growth [7] - PVH operates 128 factories in China, producing about 20% of its goods, which could face significant disruption due to the blacklisting [8] - The company also has manufacturing facilities in Vietnam, Turkey, and other countries, but shifting production may compromise quality and production processes [8] Group 3: Strategic Context - The blacklisting is seen as a retaliatory measure in the ongoing U.S.-China trade war, particularly in response to PVH's ban on Xinjiang cotton, aligning with U.S. government guidelines [6][11] - Experts suggest that China targeted PVH because it is a high-visibility brand that is large enough to make an impact but not so large as to cause major disruptions in the U.S. market [9][11] - The situation illustrates the broader geopolitical tensions, with PVH being used as an example of the potential consequences for U.S. companies operating in China amid escalating trade restrictions [11]